What is Ghost Kitchen Insurance?

Ghost Kitchen Insurance is specialized coverage for restaurants that operate out of shared commercial kitchen facilities and only offer food for delivery or takeout—no dine-in service. Also known as virtual restaurants, cloud kitchens, or dark kitchens, these operations prepare food for delivery through third-party apps like Uber Eats, DoorDash, or Grubhub, or through their own delivery systems. Ghost Kitchen Insurance typically includes general liability (for foodborne illness and products liability claims), commercial property or equipment coverage (for your cooking equipment and inventory stored in the shared space), business interruption (for lost income if you can’t operate), spoilage coverage (for inventory loss due to equipment failure), and cyber liability (for data breaches from online ordering systems). The coverage must be tailored to the unique model of operating from a shared facility without a traditional restaurant location.

What you need to know

Ghost Kitchen Insurance addresses the unique coverage needs of delivery-only restaurant operations that function without traditional dine-in facilities.

Essential coverage components:

Ghost kitchen operations typically need:

• General liability – Coverage for foodborne illness and products liability claims
• Commercial property or equipment coverage – Protection for your cooking equipment and inventory stored in the shared space
• Business interruption – Coverage for lost income if you can’t operate due to equipment failure or facility issues
• Spoilage coverage – Protection for inventory loss due to equipment failure or power outages
• Cyber liability – Coverage for data breaches from online ordering systems and customer payment information

The shared facility challenge:

Since you’re operating from a shared commercial kitchen facility, you need to understand how your insurance interacts with the facility’s insurance. Typically the facility owner has building coverage while you need coverage for your equipment, inventory, and liability arising from your operations.

Different risk profile than traditional restaurants:

You face the same products liability exposure as traditional restaurants (foodborne illness, allergic reactions, foreign objects), but you don’t have dine-in customer liability exposure (no slip-and-falls in your dining room). However, you may have higher delivery-related exposures if you use your own drivers rather than third-party platforms.

Why it matters for Restaurant Owners

Ghost kitchens have exploded in popularity as they allow restaurant owners to enter the food service business with much lower startup costs than traditional restaurants, but they create unique insurance challenges.

Navigating the insurance landscape:

Many insurance companies are still developing specialized ghost kitchen policies, so working with an agent familiar with this business model is essential. Standard restaurant policies may not adequately address the unique aspects of ghost kitchen operations, while policies designed for food manufacturers may be overly broad.

Proof of insurance requirements:

You’ll need to provide proof of insurance to third-party delivery platforms, commercial kitchen operators, and potentially your commissary kitchen landlord. Each may have specific coverage requirements and may need to be listed as additional insureds on your policy.

Critical coverage considerations:

Make sure your policy adequately covers your cooking equipment (which can be expensive professional-grade equipment), your inventory, and your business interruption exposure if equipment failure or facility closure forces you to stop operating. Unlike traditional restaurants with diverse revenue streams, ghost kitchens rely entirely on their ability to produce and deliver food.

The delivery insurance question:

Understanding whether you need hired and non-owned auto coverage or whether third-party delivery platforms’ insurance is sufficient is critical. If you use your own drivers, you need proper commercial auto insurance. If you rely exclusively on third-party platforms, verify what their insurance covers and what gaps remain.